Following the construction industry and related legal topics in the United States.


Thursday, May 31, 2007

Workplace Accidents and the Additional Insured Clause (Part 2)

A few weeks ago, I posted a blog about the danger of owners and contractors thinking that additonal insured status on a subcontractor's liability policy protected them from being entangled in lawsuits for workplace accidents. Based on the article referenced below, I recommended that the subcontractor be required to obtain an additional insured endorsement for the owner and contractor that does not exclude coverage where the owner's or contractor's negligence, but not the subcontractor's, is alleged. However, sometimes that is simply not something the subcontractor can do.

In that circumstance, owners and contractors have to fall back on a carefully worded indemnification provision in the subcontractor's contract --- and of course, the subcontractor's liability policy must be required to cover contractually assumed liabilities (of which the indemnification obligation is one). David S. White, who provided the resource material for the last blog and for this one, recommends that the indemnification provision be substantially similar to the following (minor editorial changes were made by this writer):

"Subcontractor (S) agrees to indemnify and hold harmless the Owner and
Contractor (O and C) for, from and against all liabilities, claims, penalties,
fines, forfeitures, suits and the costs and expenses incident thereto (including
costs of defense and attorneys' fees), which O or C hereafter may incur or pay
as a result of death or bodily injury to any person, or destruction or damage to
any property, arising out of the construction site or S's operations under this
Contract EVEN IF O OR C IS NEGLIGENT IN WHOLE OR IN PART."
It is important to note that, under some case law (at least in Texas), the last phrase needs to be in capital letters in order for the provision to be enforceable.

As before, thanks to David S. White, Senior Counsel with Thompson & Knight, LLP in Dallas who provided the resource material for this blog in his article on this subject in the January 2007 issue of The Practical Real Estate Lawyer. To purchase the online version of this article, go to
www.ali-aba-org and click on "online". (This entry posted by Karen Estelle Carey, a member of Womble Carlyle's Real Estate Development group.)

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